iGaming Goes Live in Three States
Since our last entry on iGaming, Nevada, New Jersey, and Delaware have become the first states with (legal) live online gaming websites within their boundaries.
In 2011, the U.S. Justice Department reversed its ruling on internet gambling. Today, legal internet gaming is gradually rolling out across the U.S. How much revenue iGaming will generate and exactly how smoothly iGaming websites will operate remains unseen.
Nevada became the first state in the U.S. to operate legal iGaming. Currently, only online poker is allowed in Nevada, and the Nevada Gaming Commission has no plans to expand beyond this in the foreseeable future. Two websites, UltimatePoker.com and W888.com hold licenses in the state with the express purpose for online gaming, launching their websites in April 2013 and September 2013 respectively. The websites are only allowed to be accessed by players physically within the state of Nevada. Participants are subjected to an extensive identity verification screening that ensures that that they are of gambling age.
But how much is Nevada making off of this new source of revenue? Nevada’s gaming commission has indicated it will only report iGaming revenues in a separate category of monthly reporting once there are three online poker sites operating in the state. With just two websites up and running, there are no official reports of online poker revenue to date.
Chapter 463 of Nevada Revised Statue, not only authorizes iGaming within the state, but positions Nevada for interstate gaming, allowing Nevada to negotiate online gaming agreements with other states.
Delaware passed legislation on June 27th, 2012 authorizing online gaming within the state. In October 2013, Delaware rolled out the first “real money stakes” internet gambling games to selected users, and in November 2013, online gambling was made widely available to Delaware residents. Users physically in Delaware are able to play not only online poker, but also blackjack, roulette, and slot games. While online gaming is not expected to generate much improvements in tax revenue, the expectation is that younger gamers will be drawn to Delaware’s brick-and-mortar casinos. After launching online gaming, gamers in Delaware who tried to play poker experienced connectivity issues due to location-based software issues.
New Jersey became the third state to offer iGaming on November 26, 2013, after the New Jersey Division of Gaming Enforcement green-lighted six casinos licensed to operate statewide internet gaming. The six casinos approved are the Borgata Hotel Casino & Spa, the Tropicana Casino and Resort, Trump Plaza Hotel and Casino, the Trump Taj Mahal Casino Resort, Bally’s Atlantic City, and Caesars Atlantic City. Registered gamers who are physically within the state of New Jersey can play blackjack, slots, and poker online.
As of early December 2013, Atlantic City’s casinos are struggling with their verification systems. The general manager at the Tropicana Atlantic City, Steve Callender, said “about 75 percent of people who have tried to play on the resort’s online gaming website — TropicanaCasino.com — have been denied because the system could not verify they were in New Jersey.” This is due primarily to three reasons: technical problems, users not physically present in New Jersey trying to access these sites, and some major banks, PayPal, and American Express having policy to not process online gaming transactions. According to Moody’s, iGaming in New Jersey stands to generate $250 million to $500 million within its first year. Being an early mover in iGaming, New Jersey hopes to gain an edge over casinos in nearby states, such as Pennsylvania, that have caused Atlantic City’s land-based operations to struggle in recent years.
According to the National Conference of State Legislatures, six states are working to authorize iGaming within their borders. California, Illinois, and Pennsylvania each have iGaming resolutions pending within the state legislative bodies. Colorado, Hawaii, Iowa, and Mississippi had iGaming laws which failed to pass in 2013. With three states already conducting iGaming operations, it’s only a matter of time before the first interstate online poker games make their debut.
Senior Analyst, Economics & Gaming
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